Chancellor Angela Merkel on Monday took responsibility for the electoral losses of her Christian Democrats (CDU) in her home state, but defended her course in the refugee crisis, saying "the decisions taken in the last few months were right."

At 20.8-per-cent support, the right-wing Alternative for Germany (AfD) replaced Merkel's CDU as the second-strongest party in Mecklenburg-Vorpommern, where a national debate about refugee integration and the threat of terrorism crowded out local issues.

"Of course this has something to do with the refugee policies, so I am responsible," Merkel said at the sidelines of the Group of 20 summit in China. However she maintained that her decisions in recent months were right.

The CDU's general secretary Peter Tauber said earlier Monday that Merkel's government had already introduced a series of measures to reduce the refugee influx, integrate the 1.1 million migrants that arrived in 2015 and improve security in the country.

"It takes time for the measures to work and to win back the trust that has been lost," Tauber said during a press conference.

Leif-Erik Holm, who heads the AfD in Mecklenburg-Vorpommern, said that the election result should act as a warning to the government to rethink its open-arms refugee policies and that "today could mark the beginning of the end of the chancellery of Angela Merkel."

The CDU fell to 19 per cent of the vote in the north-eastern state in the former East Germany, but is nonetheless likely to form another coalition with the centre-left Social Democratic Party (SPD), which won 30.6-per-cent of the vote in Sunday's poll.

Erwin Sellering, the SPD premier in Mecklenburg-Vorpommern, said Monday that the state should be proud of what it has achieved since German reunification in 1990 and that he was confident voters "wouldn't let the AfD ruin that."

The AfD has capitalized on widespread discontent about the arrival of 1.1 million migrants in Germany in 2015, which it argues resulted from Merkel's promise of sanctuary to Syrian refugees.

Its eurosceptic, anti-migrant message has propelled it into third place in national opinion polls, and it is likely to enter the Bundestag parliament after a general election next year.

"The fact that a right-wing extremist party that agitates and mobilizes against minorities in a disgustingly blunt manner can rise in such an unbridled way is a nightmare come true," said Charlotte Knobloch, the former head of the Central Council of Jews in Germany.

The leaders of right-wing parties in Italy and France applauded the AfD's electoral success.

"What was not possible yesterday has become possible: the patriots of the AfD have swept away Mrs Merkel's party," Marine Le Pen of the right-wing Front National tweeted late Sunday.

"Fantastic vote in Germany: a big slap for Merkel in her region and a triumph for Alternative for Germany, allied with the [Northern] League and Le Pen," Matteo Salvini, leader of the far-right Northern League, said on Facebook.

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